Small businesses are doing their part to create jobs. Here’s how the Legislature can help.

Employee Nancy Garcia, 19, talks about some of Envy Fine Clothing’s deals for Small Business Saturday in Merced in November 2016.
Employee Nancy Garcia, 19, talks about some of Envy Fine Clothing’s deals for Small Business Saturday in Merced in November 2016.

After years of working for others, Nelda Vargas, an accountant, and Gammie Vargas, a chef, took the plunge and opened GNC Kusina, a small Filipino grocery in Sacramento where you can also sit and grab a meal.

In 2014, when they needed a freezer and working capital – cash flow is always tight for new businesses – they approached a large bank, but didn’t qualify for a loan. Fortunately, they found Opportunity Fund, where we specialize in making small-dollar loans to underserved entrepreneurs. The couple borrowed $10,500, securing a second loan later. They now have two part-time employees, word has spread about their tasty lumpia and all-day Filipino breakfast, and they are looking to expand into a larger store.

For decades, Community Financial Development Institutions such as Opportunity Fund have offered small loans to launch or grow businesses, providing economic opportunity, jobs and services to tens of thousands of Californians. But our ability to do this is in jeopardy because a little-known state program called CalCAP, which is vital to making these loans, is running out of money.

While the businesses we serve are creditworthy, they represent greater risk than traditional financial institutions are willing to take. By providing a small match on each loan we make, CalCAP helps us build a loan loss reserve that lessens that risk. Every dollar CalCAP contributes to Opportunity Fund yields as much as $30 in loans to underserved businesses.

Sen. Ben Hueso, a San Diego Democrat, has introduced Senate Bill 551 to extend and sustain the remaining funds in CalCAP for as long as possible. The measure has passed the Senate and is scheduled to be heard Tuesday by the Assembly Committee on Jobs, Economic Development and the Economy.

Losing CalCAP would be a tremendous blow to our ability to make loans, at a time when small businesses and our economy need more investment, not less. This situation is particularly acute because President Donald Trump’s proposed 2017-18 budget eliminates the federal CDFI Fund, which also supports our work.

Since 1994, Opportunity Fund has supported more than 6,000 California business owners with more than $200 million in financing. We helped the owner of a barbecue joint in Modesto buy a food truck, bottle his award-winning barbecue sauce and hire an employee. We allowed a pair of friends in San Diego to hire more workers when their window cleaning company landed Starbucks as a client. And we helped a woman in Hayward grow her homemade tamale business from a door-to-door operation to a 6,000-square-foot factory putting out 20,000 tamales a month.

Our clients are 88 percent ethnic minorities and 39 percent women. And our research shows that our loans sustain or create three jobs, on average, and every dollar we invest generates $2 in local economic activity, totaling $120 million in California last year.

Nelda and Gammie Vargas and entrepreneurs like them are doing their part to create economic opportunity and jobs. Now, we’re asking our state representatives to do theirs by passing this bill.

Eric Weaver is founder and CEO of Opportunity Fund in San Francisco. He can be contacted at